first i would start with the card with the highest interest rate. make all the minimum payments on your cards except this one. put AS MUCH as u can toward paying it. continue to do this until its paid off. after you get that one paid off go to the next highest interest rate card. make the minimums on the others an pay this one off just like u did the first one. continue to do this til all of ur cards are paid off and dont use them again unless its for an EMERGENCY. remember emergency is a need NOT a want. (example : a need is car maintenance, personal care, food, etc. a want is: new tv, video game, etc.) after you have all your cards payed off you will now have extra money because your not in debt anymore! now take all this money (or part of it like half) and start your saving! continue to pay this money to your savings account just like its another debt you have. it will quickly add up. if u dont have an emergency savings plan id start one up. you want about 3-6 months of your expenses in it ( in case you became unemployed, or had longterm illness and couldn’t work, etc.) and remember it never hurts to have more than that. hope this gets helps and gets you headed in the right direction. goodluck!

E-mail me at [email protected] , I am a Financial Analyst and I do Free Financial Plans. It is a 20 page custimized report based on the info. you give me, and I can give you an exact date that you will be debt free. My job is to help people get out of debt and save money!

In the last few posts I have been writing about Dave Ramsey and all of the incredible personal finance information he has to offer. Their are most certainly Dave Ramsey critics out there but for the most part everyone thinks that the information he offers is extremely helpful. The only complaints come from those that argue that Dave Ramsey’s plan for financial freedom and financial peace is to conservative. I could agree with this if it was not for the debt epidemic among Americans. Unfortunately the criticism from these Dave Ramsey Critics does not factor in the fact that a lot of Americans do not have the discipline to pay off their credit cards in full every month or keep a handle on their debt.

Today I wanted to talk in detail about Dave Ramsey’s Debt Snowball reduction plan for paying off debts. The Debt Snowball reduction plan is the second step in Dave Ramsey’s 7 Baby Steps to Financial Peace training course and is probably the most important step in a persons quest for financial freedom and financial peace.

The ideology behind Dave Ramsey’s Debt Snowball reduction plan is to organize all of your debts and setup an easy, manageable, and results oriented plan for paying these debts off. These debts can include credit cards, car loans, student loans, payday loans or personal loans. It basically includes any debt that you have excluding your home mortgage.

The first step in the Dave Ramsey debt snowball debt reduction plan is to make a excel spreadsheet list of all of your debts with the lowest balance at the top of the list. After you make this list you then need to allocate as much of your monthly budget as you possibly can to debt elimination. After you have listed your debts in order from lowest to highest and decided how much you can put toward debt each month you need to determine what your payments for each account should be. This step is very simple. In the debt snowball debt reduction plan you pay only the minimum payment toward each debt you have except for the one at the top of the list (one with the lowest balance).

The plan is to pay off the smallest debt as quickly as possible and then once it is paid off you move on to the next smallest debt you have. When you move on to the second debt on your excel spreadsheet you then allocate the whole amount that was originally going to your smallest debt (the debt that is now paid off). These means that you will continue with the minimum you were paying on the now smallest debt and add the total amount that was going to your debt that is now paid off. After paying of the second smallest debt on your debt snowball excel spreadsheet you will move on to the third smallest.

The idea with the debt snowball reduction plan is to continue doing this until you have paid off all of your debts (excluding your house payment). Dave Ramsey’s rational with the debt snowball method is to gain steam and see results by paying off the smallest debts first. The Debt Snowball method will help you to see real results and help motivate you to continue. For most people they need to see results and feel like they are making progress or they will quite within 6 months of starting a plan to pay off their debt.

Below I have included an example of the Dave Ramsey debt snowball debt reduction plan for my readers. I have also included several links to Debt Snowball Calculators. The debt snowball calculator should help give you an idea of how long it will take to pay off each debt.

Example of the debt snowball method (Courtesy of Wikipedia)

Ignoring interest rates, let’s pretend you have the following debt and minimum payments:

Now, assuming you had $ 100 extra per month to send in, you would apply that $ 100 to the Credit Card A so that the payment for it would be $ 125 per month and the other debt would receive the minimums.

After Credit Card A is paid off (in two months), you would apply the extra $ 100 to Credit Card B PLUS the $ 25 you were sending in to Credit Card A. So now your payment to Credit Card B would be: $ 26 normal minimum + $ 25 that you normally sent in to Credit Card A + $ 100 that you are able to send extra.

Your payment to Credit Card B would be $ 151 instead of $ 26. Therefore, you would pay it off much faster. Then, when Credit Card B is paid off, you would now send in the following to the Car Payment: $ 150 normal minimum + $ 25 that you normally sent in to Credit Card A + $ 26 that you normally sent in to Credit Card B + $ 100 that you are able to send extra. Your payment to Car Payment would now be $ 301 instead of $ 150.

To follow the debt snowball debt reduction plan you would simply continue to follow this plan until all debts were paid off.

The debt snowball debt reduction plan is one of the best plans available for paying off debt. It helps people to see immediate results and gain momentum in their plan to be debt free. Go ahead and start your own debt snowball reduction plan and begin your journey toward financial freedom and financial peace.

Dave Ramsey is personal finance expert who specializes in giving out information to help people get out of debt and achieve financial peace. His radio show The Dave Ramsey Show is aired on over 300 different radio stations each day and heard by over 3 million listeners. Dave Ramsey is also the author of many great books including The Total Money Makeover, Financial Peace, and More Than Enough.

So, back in 07/11 We started seeing our mortgage monthly payments increase about 60.00. We looked into it and it seemed like there was a “forced insurance policy” put onto our mortgage loan. I looked …